SOSHILA KESWANI v. MOTIRAM KESWANI

DCCJ 579/2013

[2019] HKDC 1166

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 579 OF 2013

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DECISION

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Introduction

1.  These are two applications by the plaintiff, one for leave to appeal and another for stay of execution of certain orders and judgment.

2.  This is originally a case of dispute between the plaintiff and the defendant being two siblings, both senior citizens[1], over certain rental income of property inherited from their parents, namely the 1/F to the 5/F of a building at No. 50C Wing Hong Street, Kowloon (“1-5/F”).

3.  In summary, pursuant to, first, the father’s will and subsequently, the mother’s will, the 1-5/F were passed to the four sons of the family, including the defendant being the eldest brother, and the G/F of the building was passed to the plaintiff being the youngest sister.

4.  In 2002, the plaintiff, the defendant and the other 3 siblings executed a Deed of Family Arrangement dated 13 June 2002 (“Deed”) prepared by and in the presence of a solicitor Chu.  The Deed provided that the defendant, as the executor of the mother’s will, should upon the grant of probate assign the 1-5/F to the 5 siblings, i.e. including the plaintiff, in equal shares.  To carry out the arrangement of the Deed, the 5 siblings subsequently executed a vesting assignment dated 3 September 2002 (“Assignment”), also prepared by and in the presence of same solicitor Chu.

5.  The plaintiff commenced these proceedings to claim against the defendant for all the rentals she was entitled to, i.e. 1/5 of the total rentals received by the defendant in respect of 1-5/F, for certain periods from 2001 to 2017.  The defendant contested the plaintiff’s claim on the basis that both the Deed and the Assignment were voidable or void and, by way of a counterclaim, sought a declaration to that effect.

6.  By a judgment handed down on 31 January 2019 (“Judgment”), I dismissed the plaintiff’s claim for rental income arising from the 1-5/F[2] and allowed the defendant’s counterclaim for a declaration that the Deed and the Assignment as between the plaintiff and the defendant are void (“Declaration”)[3], on the basis that the defendant was under the mistaken belief that the Deed and the Assignment were formal documents for the purpose of application for probate of the mother’s will and would not affect his rights (non est factum)[4].

7.  By a summons dated 27 February 2019, the plaintiff applied for leave to appeal against the Judgment (“Leave to Appeal Application”).  By another summons dated 24 June 2019, the plaintiff applied for stay of execution of “the Defendant’s Bill of Costs filed on 31 May 2019” (assuming it refers to the relevant taxation proceedings), orders dated 20 May 2015 and 3 July 2017 respectively as well as the Judgment (“Stay Application”).  Both applications are opposed by the defendant.

Leave to Appeal Application

8.  I shall first deal with the Leave to Appeal Application.

The principles

9.  The starting point is that, under s.63A(2) of the District Court Ordinance, Cap. 336, leave to appeal to the Court of Appeal shall not be granted unless this Court or the Court of Appeal is satisfied that the appeal has a reasonable prospect of success, or that there is some other reason in the interests of justice why the appeal should be heard.  Leave to appeal is not lightly granted.  Reasonable prospect of success involves the notion that the prospect of succeeding must be “reasonable” and therefore more than “fanciful”, without having to be probable^[5]. The burden of proof is on the applicant (here the plaintiff) for leave to appeal[6].

10.  If there is an application for leave to adduce new or further evidence in an appeal, the Ladd and Marshall^[7] conditions should apply^[8]. Further evidence is admissible on an appeal only where such evidence:-

(a)  could not have been obtained at the trial with reasonable diligence;

(b)  would or might, if believed, have a very important effect on the mind of the court; and

(c)  is of a sort which inherently is not improbable.

My analysis

11.  There are altogether 4 grounds of appeal relied upon by the plaintiff.  I shall deal with them one after another.

12.  Ground 1 concerns issue of jurisdiction.  The plaintiff argues that this Court has no jurisdiction to grant the Declaration, under the counterclaim, that the Deed and the Assignment as between the plaintiff and the defendant are void.  The plaintiff now seeks to adduce new evidence to show that the total rateable value of the 1-5/F is HK$523,800, and therefore the counterclaim involving land with rateable value over HK$240,000 exceeds this Court’s jurisdiction to hear and determine[9].

13.  No issue had ever been taken by the plaintiff with the jurisdiction of this Court in hearing and determining the counterclaim at any stage and as such, no evidence had been adduced and no submissions made in relation thereto during the trial.

14.  Now that the plaintiff, without any affirmation in support, simply annexed to her written submissions certain printouts, appeared to have been downloaded from the website of the Rating and Valuation Department, to show the total rateable value of the 1-5/F.  On the face of it, the caption of the printouts is “2019-2020” and the date of the printouts (at the bottom) is “25/3/2019”, indicating that is the date of the valuation.

15.  First, I have to consider if the new evidence of the total rateable value of the 1-5/F should be admitted at this stage.  I am not convinced that it should be so admitted.  Both the first and the second conditions under Ladd and Marshall are not satisfied.  Regarding the first condition, the new evidence could certainly have been obtained with due diligence at the trial.  Regarding the second condition, the present action is not an “action for the recovery of land”, the defendant only sought (and this Court granted) the Declaration, and therefore section 35 of the District Court Ordinance does not come into play.  Even if this action falls within the ambit under sections 36(b) or 37(4) of the District Court Ordinance[10], the new evidence is irrelevant or at least has no important effect on the mind of the Court as it could at most reflect the rateable value of the 1-5/F in 2019 when these proceedings were commenced in 2013[11].

16.  Second, even if the new evidence is admitted and that it is shown that the total rateable value of 1-5/F is HK$523,800, the Declaration claimed and granted under the counterclaim does not exceed this Court’s jurisdiction under sections 32 to 39 of the District Court Ordinance.  It is important to note that the Declaration is that the Deed and the Assignment as between the plaintiff and the defendant are void.  Both the Deed and the Assignment were executed by the 5 siblings including the plaintiff and the defendant but the other 3 brothers were not parties to these proceedings. Nevertheless, as I found in the Judgment[12], each of the Deed and the Assignment could properly be construed as severable into separate agreements, including one between the plaintiff and the defendant.  As clearly stated in the Deed, it was made between the defendant as “the Executor” (of the deceased mother’s estate) on the one side, and the defendant as “the 1^st Beneficiary”, the 2^nd elder brother as “the 2^nd Beneficiary”, the 3^rd elder brother as “the 3^rd Beneficiary”, the 4^th elder brother as “the 4^th Beneficiary” and the plaintiff as “the 5^th Beneficiary” on the other side.  Similarly, for the Assignment, it was made between the defendant as “the Executor” of the one part and all the 5 siblings including the plaintiff and the defendant as “the Beneficiaries” of the other part.  As the Declaration claimed and granted is only in relation to the Deed and the Assignment as between the plaintiff and the defendant, it is only related to one of the five contracts under those documents[13] and therefore only one-fifth of the land in question.

17.  Finally, if I am wrong on the above, the total rateable value of HK$523,800 should be taken into account and that, as a result, the counterclaim falls outside the scope of the jurisdiction as conferred under sections 32 to 39 of the District Court Ordinance, this Court still has jurisdiction to hear and determine this action under section 41(3)(c) and (6) of the same Ordinance.

18.  It is provided under section 41(3) and (6) of the District Court Ordinance that:-

“41. Procedure where proceedings beyond the jurisdiction of the Court are commenced in the Court

(1)  …

(2)  …

(3)  If a defendant in an action or proceeding within the jurisdiction of the Court makes a counterclaim which is not within the jurisdiction of the Court but within the jurisdiction of the Court of First Instance, the Court may, either of its own motion or on the application of any party, order—

(a)  that the whole proceedings be transferred to the Court of First Instance; or

(b)  that the proceedings on the counterclaim be transferred to the Court of First Instance; and the proceedings on the plaintiff’s claim, except for a defence of set-off as to the whole or a part of the subject matter of the counterclaim, be heard and determined by the Court; or

(c)  where the Court considers the whole proceedings should be heard and determined in the Court, that the matter be reported to the Court of First Instance or a judge thereof.

(4)  …

(5)  …

(6)  If no report is made under subsection (3)(c), or if on any such report it is ordered that the whole proceedings be heard and determined in the Court, the Court shall have jurisdiction to hear and determine the whole proceedings notwithstanding any enactment to the contrary.”

19.  Without a doubt, the plaintiff’s claim for the rental income of HK$599,820 plus her 20% share of the rental income generated from 2001 to 2006 and 2016 to 2017[14] falls within the jurisdiction of this Court under section 32 of the District Court Ordinance.  The defendant’s counterclaim for the Declaration, if exceeds the jurisdiction of this Court, must be within the jurisdiction of the Court of First Instance under section 12 of the High Court Ordinance, Cap. 4.  Since no report has been made under section 41(3)(c) of the District Court Ordinance, this Court retains the jurisdiction under section 41(6) of the same Ordinance to hear and determine the counterclaim and eventually granted the Declaration[15].  It is important to note that the plaintiff was all along unrepresented throughout the proceedings and that her claim and the defendant’s counterclaim are apparently intertwined, with the subject matter being the validity or otherwise of the Deed and the Assignment.  It was expedient for the claim and the counterclaim to be heard together by this Court without having the whole proceedings or the counterclaim alone to be transferred to the Court of First Instance.

20.  The authority Chan Chi Wai & anor v Chan Sau Wah & ors DCCJ 1503/2014, decision dated 3 August 2016, relied upon by the plaintiff does not assist her.  Not only that it was decided in the interlocutory stage and more importantly, both parties (both represented) did not object to transferring the whole proceedings to the Court of First Instance in the event that the court found that the counterclaim exceeded the jurisdiction of the District Court[16].

21.  Ground 1 is not reasonably arguable.

22.  Ground 2 concerns the issue of joinder of other siblings.  The plaintiff argues that the other siblings (i.e. the other 3 brothers)[17] and even the defendant as “Executor”[18], should be joined in this action under Order 15 rule 4(2) of the Rules of the District Court, Cap. 336H, which provides that:-

“4.  Joinder of parties (O. 15, r. 4)

(7)  …

(8)  Where the plaintiff in any action claims any relief to which any other person is entitled jointly with him, all persons so entitled must, subject to the provisions of any written law and unless the Court gives leave to the contrary, be parties to the action and any of them who does not consent to being joined as a plaintiff must, subject to any order made by the Court on an application for leave under this paragraph, be made a defendant.

(9)  …”

23.  Again, this is an issue which had never been raised throughout the trial or at any earlier stages.  In any event, the plaintiff’s argument is misconceived.  Order 15 rule 4(2) applies only when another person is jointly “entitled” to the relief sought by a party.  The claim for rental income by the plaintiff was only for her own benefits. Similarly, the Declaration under the counterclaim by the defendant was only in relation to the plaintiff and the defendant.  Eventually, the Declaration granted is only to the effect that the Deed and the Assignment as between the plaintiff and the defendant are void.  Hence, the other siblings are not “entitled” jointly with the plaintiff or the defendant to the relief sought.

24.  The authority Lui Yuk Yin v Lam Chuen & anor DCCJ 1178/2005, decision dated 1 March 2006, relied upon by the plaintiff, can be easily distinguished from this case.  The relief sought in that case was a declaration that the plaintiff and a person named Lam had a beneficial interest in the subject property as beneficial joint tenants.

25.  The plaintiff also argues that “there may also be ‘locus standi’ problem with the defendant”, the Declaration also “affect all siblings’ ownership, shares in tenant in common and rights to possession of 1-5/F”, and that the Declaration “will cause a lot of trouble and uncertainties as to the ownership of 1-5/F”[19]. There is no substance in those complaints. As repeatedly said, the Declaration is in relation to the plaintiff and the defendant only, the interests of the other siblings remain unaffected.

26.  Ground 2 has no merits.

27.  Ground 3 concerns the issue of non est factum.  The plaintiff argues, in essence, that I am wrong to find that the Deed and the Assignment are void (as between the plaintiff and the defendant) on the basis of non est factum.

28.  This issue of non est factum, was in fact one of the key issues in dispute at the trial.

29.  The several authorities relied upon by the plaintiff, with the relevant legal principles set out in the plaintiff’s submissions[20], does not assist the plaintiff.  It is the application of the principles for the specific facts of a case that matters. 

30.  I have already carefully considered the relevant legal principles and all the evidence of this case at paragraphs 66 to 74 of the Judgment, and eventually came to conclude at paragraph 75 that:-

“75. It is therefore likely, and I so accept, that the defendant would not have executed the Deed and the Assignment if he was aware of the genuine nature of those documents at the material time. I am prepared to accept the defendant’s version that he, at the time of execution, mistakenly believed that the Deed and the Assignment were standard and routine documents for the Mother’s probate. In other words, the Deed and the Assignment are essentially or fundamentally different from what the defendant intended to execute and that it was never his intention to execute them. Also, in view of the defendant’s old age, his only intention of instructing Chu to assist with the Mother’s probate and his trust in the Defence Witness, I do not consider him to be negligent when executing those documents. This defence of non est factum succeeds. I find both the Deed and the Assignment void on that basis.”

31.  Those paragraphs in the Judgment set out my application of the relevant principles of non est factum and finally my findings of facts. I am not convinced that I was plainly wrong in my said conclusion by, for example, concluding with no evidence to support, misunderstanding or overlooking the evidence or failing to appreciate its effect, or having reached a conclusion which no reasonable judge could have reached[21].

32.  Ground 3 fails.

33.  Finally, Ground 4 concerns assessment of evidence.  The plaintiff argues that there was incorrect or insufficient assessment of the evidence by me in various aspects. I shall deal with them one by one.

(a)  The plaintiff argues that the defendant should know the contents of the Deed and the Assignment as they were registered in the Land Registry long ago and that the defendant should have received notices/letters from the government authorities over the years so that he should know that the 1-5/F was co-owned by the 5 siblings[22]. All these arguments were not raised at the trial.  In any event, there is no substance in these arguments.  There was no evidence that the defendant was aware of the registration of those documents or that he had received any relevant notices/letters and became aware of the contents thereof.

(b)  The plaintiff complains that it is unfair for me to take into account her conduct in some previous unrelated proceedings[23] when considering her overall credibility in this case[24].  Her conduct in previous unrelated proceedings was an area of serious cross-examination by the defence and I certainly can take that into account when deciding on the credibility issue in this case.  Also, it is not that I did not find the plaintiff an honest witness simply because of her conduct in those previous proceedings.  I came to that conclusion on credibility by taking into account other matters as well[25].

(c)  The plaintiff complains that I should not consider her father’s will in 1961 which was void[26]. I was fully aware that it was void and I took note of it simply to consider the father’s last testamentary intention and the improbabilities of other siblings intending to give the biggest share of the property to the plaintiff[27].

(d)  The plaintiff argues that the defendant’s claim that he mistakenly believed that the Deed and the Assignment were routine documents for the mother’s probate is clearly unbelievable because the probate was granted before the execution of the Assignment[28]. Again, that was not put to the defendant at the trial and there was no evidence that the defendant knew that the probate had already been granted when he executed the Assignment, or whether he still believed there were further routine document to sign after the granting of the probate.

(e)  The plaintiff argues on the improbabilities of the solicitor Chu acting against the defendant’s interest and purposely not explaining the contents of the Deed and the Assignment to the defendant before execution[29]. At the trial, one of the issues in dispute was the role of the solicitor as both parties denied having instructed her to prepare the Deed and the Assignment.  I had carefully considered all the circumstances and found that the solicitor prepared the Deed and the Assignment on the instructions of the plaintiff[30]. The solicitor therefore acted for the interest of the plaintiff but not that of the defendant in that respect.  I never found the solicitor “purposely” not explaining the contents of the documents to the defendant and in fact I found no misrepresentation made by her to the defendant[31].

(f)  The plaintiff argues that there was equal motive for the defendant to deny the plaintiff’s 20% share of 1-5/F and the rental income[32]. When I considered the motivation of the plaintiff to instruct the solicitor to prepare the Deed and the Assignment, I took into account the fact that the plaintiff would be the only person to benefit from those documents and the defendant as well as the other 3 siblings would inevitably suffer a loss as their respective shares in the 1-5/F would be reduced[33]. When I was considering the motive of the plaintiff, it was her motive at the time of the preparation of the Deed and the Assignment.  At that time, there was no motive for the defendant to do so as he would only suffer a loss after execution of those documents.  In any event, motive was only one of the matters which I had considered when deciding on the role of the solicitor.

34.  Ground 4 also fails.

35.  Having considered all the grounds of appeal advanced by the plaintiff, I am not satisfied that the appeal has a reasonable prospect of success, or that there is some other reason in the interests of justice why the appeal should be heard.  I accordingly refuse the plaintiff’s Leave to Appeal Application.

Stay Application

36.  Since I have refused the plaintiff’s Leave to Appeal Application, there is no reason for me to grant any stay of execution of “the Defendant’s Bill of Costs filed on 31 May 2019” (assuming it refers to the relevant taxation proceedings), orders dated 20 May 2015 and 3 July 2017 respectively as well as the Judgment, as now applied for by the plaintiff.  The Stay Application must also be refused.

Disposal

37.  Both the Leave to Appeal Application and the Stay Application are refused.  The relevant summonses dated 27 February 2019 and 24 June 2019 respectively are hereby dismissed.  There is no reason why costs should not follow the event.  The defendant’s representative has submitted 2 statements of costs for summary assessment, one for the Leave to Appeal Application and the other for the Stay Application.  Now I order costs be paid by the plaintiff to the defendant, with certificate for counsel, which costs are summarily assessed at HK$70,000 in total (HK$50,000 for the Leave to Appeal Application and HK$20,000 for the Stay Application).